Sole-Source Castings: Performance Crisis and Relationship Reset

Precision should be segmented as a strategic, sole-source supplier with high supply risk and high value, not as a transactional underperformer. That segmentation means the response should combine risk mitigation with joint improvement, not simply chargebacks. Diagnose before committing: separate supplier-caused defects from buyer-caused volatility. Review forecast changes over the last 12 months, engineering-change timing, order pattern, and lot-level defect data. If Vantage changed forecasts by more than the agreed frozen window or issued late engineering changes, part of the 87% on-time and 2,100 ppm is self-inflicted. At the same time, two corrective-action requests with limited response is a governance failure. Quantify the cost of failure: line-stop exposure, expedite freight, and customer penalties. Dual sourcing is a valid 11-month mitigation, but it does not solve the next quarter. The reasoning is that a strategic sole source cannot be managed only through penalties; the buyer must fix its own inputs and set a performance contract, while investing in a qualified alternate for long-term resilience.

Create a joint governance structure with three layers: an executive sponsor pair for the volume commitment and investment decision, a monthly operational review for delivery, quality, and capacity, and a weekly tactical huddle for hot lots and corrective actions. The scorecard should include on-time delivery, ppm, scrap and rework, corrective-action closure time, forecast adherence, engineering-change responsiveness, and capacity utilization. Add a buyer-side metric for forecast stability and change notice so accountability is shared. Set thresholds with consequences: for example, two consecutive months below 92% on-time triggers a recovery plan; below 87% triggers a volume reallocation review. Require Precision to open its furnace ramp plan, capacity model, and quality data. The reasoning is that a scorecard without governance is reporting, not management. Shared metrics reduce the adversarial dynamic by making Vantage's contribution visible, while clear thresholds protect Vantage if performance does not improve.

Separate the chargebacks from the forward commercial deal, but link both to performance. Validate the $480,000 against the contract and actual cost evidence; if valid, propose a settlement schedule or credit against future volume rather than a unilateral write-off. Do not release the claim simply to reset the relationship, because that rewards non-performance. On the three-year commitment, offer a conditional commitment: a firm volume band for 12 months, with extension contingent on agreed quality and delivery gates and on furnace validation. On price uplift, require open-book cost data and tie any increase to capacity, yield improvement, and lead-time reduction. Consider a shared investment mechanism, such as tooling or qualification funding, with clawback if volumes are not awarded. The reasoning is that Precision needs certainty to invest, while Vantage needs protection against locking in poor performance. A conditional commitment gives Precision a path to stability and gives Vantage leverage to enforce the recovery plan.